U.S. oil futures on Wednesday aimed to halt a five-session skid amid unverified claims of progress toward coronavirus vaccines and treatments that could stem the spread of the Asian outbreak that has crushed expectations for demand from China, one of the world’s biggest importers of crude.
China’s s Changjiang Daily reported that researchers at Zhejiang University had zeroed in on two drugs to successfully fight the coronavirus, while Sky News reported progress toward a vaccine.
The reports come as the death toll from the novel coronavirus rose to 490 in mainland China and the number of new cases increased to 24,324.
Still, the World Health Organization has said that there are “no known effective therapeutics” against the virus, in response to the media reports.
“Oil’s bloodbath could be over after researchers announce the breakthrough in creating a coronavirus vaccine,” wrote Edward Moya, senior market analyst at Oanda, in a Wednesday research report.
West Texas Intermediate crude for March delivery CLH20, +3.02% was trading $1.18, or 2.4%, higher at $50.78 a barrel on the New York Mercantile Exchange. The commodity entered a bear market on Monday, usually defined as a decline from a recent peak of at least 20%.
April Brent crude BRNJ20, +3.22% gained $1.31, or 2.4%, to $55.27 a barrel on ICE Futures Europe, following its lowest settlement since Dec. 31, 2018. The international benchmark also bear market on Monday.
Moya said that “energy traders might start pricing a return to normalcy in Chinese demand for crude in the second quarter.”
The moves also come after a late-Tuesday report from American Petroleum Institute which showed that U.S. crude supplies rose by 4.2 million barrels for the week ended Jan. 31. The API data also reportedly showed a stockpile increase of about 2 million barrels for gasoline, while distillate stocks declined by 1.8 million barrels.
That report comes ahead of a more closely followed weekly report from the U.S. Energy Information Administration, which is due at 10:30 a.m. Eastern Time. The EIA data are expected to show crude inventories rose by 3 million barrels last week, according to analysts polled by S&P Global Platts. They also forecast a supply climb of 1.9 million barrels for gasoline, while distillate inventories were expected to decline by 100,000 barrels.
Sentiment for crude had been weak due to the concerns about the impact of coronavirus on appetite for the commodity amid fears that the market was oversupplied.
Recent reports indicated that the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, were considering deeper production cut to stabilize prices.
Among the scenarios under discussion at a technical meeting held in Vienna on Tuesday and Wednesday, may cuts of 800,000 barrels to 1 million barrels a day, according to The Wall Street Journal.
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